India's retail inflation at 5.09% in February, remains within the RBI tolerance band for sixth straight month

According to a poll by CNBC-TV18, CPI in February was projected at 5.12% against 5.1% in the preceding month, a three-month low. The retail inflation stood at a four-month high of 5.69% in December.

February's core CPI came at 3.37%, the lowest since November 2019, against 3.6% in January. The CNBC-TV18 poll estimated the core inflation at 5.12%.

Akhil Mittal, Senior Fund Manager-Fixed Income of Tata Asset Management, said, "Headline inflation in February 2024 stands at 5.09%, slightly below market expectations of 5% and lower than January's 5.10%. The major contributor was food inflation, registering at 8.66% against 8.3% in January. Core inflation remains below 3.4%, offering significant reassurance and potentially steering headline inflation closer to the RBI's 4% target in the long run.

While the RBI has highlighted the risk of food inflation spilling over into broader inflation, we anticipate the regulator to maintain a cautious stance. However, the softening of core inflation should provide relief. We think RBI would rather continue with stability priority and continue maintaining the 4% inflation target as sacrosanct, and hence we do not see a premature easing from RBI."